Eiess v. USAA Fed. Sav. Bank, Case No. 19-cv-00108-EMC

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
Writing for the CourtEDWARD M. CHEN, United States District Judge
Citation404 F.Supp.3d 1240
Docket NumberCase No. 19-cv-00108-EMC
Decision Date23 August 2019
Parties Elizabeth EIESS, Plaintiff, v. USAA FEDERAL SAVINGS BANK, Defendant.

404 F.Supp.3d 1240

Elizabeth EIESS, Plaintiff,
v.
USAA FEDERAL SAVINGS BANK, Defendant.

Case No. 19-cv-00108-EMC

United States District Court, N.D. California.

Signed August 23, 2019


404 F.Supp.3d 1244

Jonathan M. Streisfeld, Pro Hac Vice, Kopelowitz Ostrow P.A., Fort Lauderdale, FL, Todd David Carpenter, Carlson Lynch LLP, San Diego, CA, Andrea R. Gold, Hassan Ali Zavareei, Tycko & Zavareei LLP, Jeffrey Douglas Kaliel, Sophia Goren Gold, Kaliel PLLC, Washington, DC, Annick Marie Persinger, Tanya Susan Koshy, Tycko & Zavareei LLP, Oakland, CA, for Plaintiff.

Megan Sandra Webster, Thomas Vangel Panoff, Mayer Brown LLP, Chicago, IL, Elspeth Victoria Hansen, Mayer Brown LLP, Palo Alto, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO COMPEL ARBITRATION

Docket No. 32

EDWARD M. CHEN, United States District Judge

Plaintiff Elizabeth Eiess has filed a putative class action against Defendant USAA Federal Savings Bank ("USAA"), alleging that she is a customer of USAA and that USAA has improperly assessed fees against her and others similarly situated. Ms. Eiess has asserted claims for breach of contract and unjust enrichment, as well as violation of California consumer protection laws. USAA has moved to compel the entirety of the case to arbitration. Arbitration, if it were to go forward, would be on an individual basis only – i.e. , Ms. Eiess could not proceed with any class claims.

Having considered the parties' briefs and accompanying submissions, as well as

404 F.Supp.3d 1245

the oral argument of counsel, the Court hereby GRANTS in part and DENIES in part USAA's motion to compel arbitration.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. First Amended Complaint ("FAC")

In the operative first amended complaint ("FAC"), Ms. Eiess alleges as follows.

Ms. Eiess is a customer of USAA and maintains a checking account with the bank. See FAC ¶ 13. Since 2014, she has resided in California. See FAC ¶ 20.

In October 2018, she tried to use funds in her USAA checking account to pay for a credit card bill (in the amount of $358.83). See FAC ¶ 21. "USAA rejected payment of that transaction due to insufficient funds and charged [her] a $29 NSF [non-sufficient funds] Fee for doing so." FAC ¶ 22. "Three days later, ... the same transaction was submitted for payment again" – (presumably, by the credit card company), but USAA again rejected the transaction due to insufficient funds and charged Ms. Eiess a second NSF Fee of $29. FAC ¶ 23. Five days later, the same transaction was submitted for payment, and USAA charged Ms. Eiess a third NSF Fee of $29 based on insufficient funds. See FAC ¶ 25. In short, "USAA charged [Ms. Eiess] $87 in fees to attempt to process a single $358.85 payment." FAC ¶ 27 (emphasis omitted).

According to Ms. Eiess, by charging multiple NSF Fees for only one transaction, USAA has breached the terms of contracts that exist between them – namely, a Deposit Agreement, an Online Banking Agreement, and a Fee Schedule. Ms. Eiess maintains that these documents expressly state that USAA will charge only one NSF Fee per single transaction. Ms. Eiess further asserts that, because the above documents are publicly available, members of the public who consider opening a checking account with USAA will be misled by its representations that it only charges one NSF Fee per transaction.1

Based on, inter alia , the above allegations, Ms. Eiess brings a claim for breach of contract or, in the alternative, unjust enrichment. Ms. Eiess also brings two statutory claims – i.e. , a claim for violation of California Business & Professions Code § 17200 and a claim for violation of the California Consumer Legal Remedies Act ("CLRA"). Ms. Eiess seeks to bring all claims as class claims. For the statutory claims, part of the relief sought is injunctive in nature; in particular, Ms. Eiess seeks an order preventing USAA from misrepresenting its NSF Fee policy in its publicly available documents.

B. Arbitration Agreement

In response to Ms. Eiess's lawsuit, USAA has moved to compel arbitration of all of her causes of action, both common law and statutory. USAA notes that there is an arbitration clause contained in the Deposit Agreement between the parties. See FAC, Ex. A (Deposit Agreement). If USAA is successful in compelling arbitration, then, by the terms of the arbitration provision, Ms. Eiess may not proceed with any class claims and instead is limited to resolution of her individual claims only.

The arbitration clause provides, in relevant part, as follows:

Resolution of Disputes and Claims

Any Covered Claim, upon election by either you or FSB, shall be resolved by arbitration according to the terms of this
404 F.Supp.3d 1246
Arbitration section.... Covered Claims subject to arbitration, include without limitations (a) those based in contract; tort; state or federal statutes, regulations or ordinances; state or federal common law; state or federal constitutional law; and (b) those seeking any form of equitable relief or money damages

Claims Covered by Arbitration

A Covered Claim is (without limitation) any pre-existing, present, or future dispute, claim, or controversy that in any way arises out of or relates to:

* * *

• The account or account disclosures, including for example any application, advertisement, disclosure, promotion, or oral or written statement related to the account, or the establishment, operation, or termination of your account, whether occurring or made before your account was opened or after it was closed or terminated.

• A payment (or returned payment) or credit (or the failure to provide a credit).

* * *

Class Action Limitations

The arbitrator shall be restricted to resolving only the Covered Claims between you and FSB. Unless you and FSB both consent in writing, the arbitrator shall NOT have the authority to conduct any class-wide arbitration proceedings. The arbitrator may not consolidate or join together any Covered Claims you and FSB have against each other with any claims or disputes you or FSB may have with other persons or account holders, unless you and FSB both consent in writing. You may not pursue any type of collective action or class action against FSB in court or in arbitration. You will not have the right to act as a class representative or participate as a member of a class of claimants with respect to any Covered Claim as to which arbitration has been elected. If one or more of the above limitations on proceedings and other rights is deemed to be unenforceable or interpreted to not prevent a collective or class action, then such collective or class action shall proceed in a court of law and not in arbitration.

FAC, Ex. A (Deposit Agreement at 31-33) (emphasis in original).

Also included in the arbitration clause is a provision that restricts the arbitrator's ability to award public (as opposed to private) injunctive relief.

Limitation of Arbitrator's Authority

The arbitrator may award any damages or other relief permitted by applicable substantive law, including punitive damages.... The arbitrator may award injunctive or declaratory relief that would benefit you or FSB, but the arbitrator may not award injunctive or declaratory relief for the benefit of others who are not named parties to the arbitration proceedings.

FAC, Ex. A (Deposit Agreement at 33). Because the arbitration clause requires covered claims to be arbitrated rather than litigated, and then bars an arbitrator from awarding public injunctive relief, the clause effectively provides that a USAA customer waives the ability to seek public injunctive relief in any forum, whether judicial or arbitral. USAA does not dispute such. USAA also does not dispute that, under California law, a waiver of public injunctive relief in any forum is not enforceable, see McGill v. Citibank N.A. , 2 Cal. 5th 945, 216 Cal.Rptr.3d 627, 393 P.3d 85 (2017), and that, under Ninth Circuit

404 F.Supp.3d 1247

law, the "McGill rule" is a generally applicable contract defense that is not preempted by the Federal Arbitration Act ("FAA"). See Blair v. Rent-A-Center, Inc. , 928 F.3d 819, 830-31 (9th Cir. 2019).

II. DISCUSSION

A. Legal Standard

The parties agree that the FAA applies with respect to their dispute over whether Ms. Eiess's causes of action should be compelled to arbitration. Under the FAA, an agreement to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. "The final clause of § 2, its saving clause, permits agreements to arbitrate to be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability, but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." Sakkab v. Luxottica Retail N. Am., Inc. , 803 F.3d 425, 432 (9th Cir. 2015) (internal quotation marks omitted).

B. Contract Formation

Initially, the parties' focus largely seemed to be on the McGill rule and whether it was preempted by the FAA; however, with Ms....

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18 practice notes
  • Peter v. Doordash, Inc., Case No. 19-cv-06098-JST
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • April 23, 2020
    ...look to the forum state's choice of law rules to determine the controlling substantive law."); Eiess v. USAA Federal Savings Bank , 404 F. Supp. 3d 1240, 1249 (N.D.Cal.2019) (citation omitted) (where "the underlying basis for CAFA jurisdiction is diversity, the forum state's choice of law r......
  • Chess v. CF Arcis IX LLC, Case No. 20-cv-01625-CRB
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • July 22, 2020
    ...remedies that benefitted anyone not a party to the arbitration. See e.g., Blair, 928 F.3d 819; Eiess v. USAA Fed. Sav. Bank, 404 F. Supp. 3d 1240 (N.D. Cal. 2019). Because the arbitration agreement in the Membership Plan contract does not preclude a public injunction as a potential remedy, ......
  • Greenley v. Avis Budget Grp. Inc., Case No.: 19-cv-00421-GPC-AHG
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • March 26, 2020
    ...of the general public." McGill, 2 Cal. 5th at 955 (citations and quotations omitted); see also Eiess v. USAA Fed.Page 13 Sav. Bank, 404 F. Supp. 3d 1240, 1258 (N.D. Cal. 2019) (finding that plaintiff sought public injunctive relief by seeking to "enjoin [Defendant] from future violations of......
  • Escobar v. Nat'l Maint. Contractors, 3:20-cv-01695-SB
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Oregon)
    • August 12, 2021
    ...Accordingly, the Court concludes that the rule announced in Brennan and Oracle does not apply here. See Eiess v. USAA Fed. Sav. Bank, 404 F.Supp.3d 1240, 1253 (N.D. Cal. 2019) ("Although incorporation by reference may fairly be deemed a clear and unmistakable delegation where there are soph......
  • Request a trial to view additional results
18 cases
  • Peter v. Doordash, Inc., Case No. 19-cv-06098-JST
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • April 23, 2020
    ...look to the forum state's choice of law rules to determine the controlling substantive law."); Eiess v. USAA Federal Savings Bank , 404 F. Supp. 3d 1240, 1249 (N.D.Cal.2019) (citation omitted) (where "the underlying basis for CAFA jurisdiction is diversity, the forum state's choice of law r......
  • Chess v. CF Arcis IX LLC, Case No. 20-cv-01625-CRB
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • July 22, 2020
    ...remedies that benefitted anyone not a party to the arbitration. See e.g., Blair, 928 F.3d 819; Eiess v. USAA Fed. Sav. Bank, 404 F. Supp. 3d 1240 (N.D. Cal. 2019). Because the arbitration agreement in the Membership Plan contract does not preclude a public injunction as a potential remedy, ......
  • Greenley v. Avis Budget Grp. Inc., Case No.: 19-cv-00421-GPC-AHG
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • March 26, 2020
    ...of the general public." McGill, 2 Cal. 5th at 955 (citations and quotations omitted); see also Eiess v. USAA Fed.Page 13 Sav. Bank, 404 F. Supp. 3d 1240, 1258 (N.D. Cal. 2019) (finding that plaintiff sought public injunctive relief by seeking to "enjoin [Defendant] from future violations of......
  • Escobar v. Nat'l Maint. Contractors, 3:20-cv-01695-SB
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Oregon)
    • August 12, 2021
    ...Accordingly, the Court concludes that the rule announced in Brennan and Oracle does not apply here. See Eiess v. USAA Fed. Sav. Bank, 404 F.Supp.3d 1240, 1253 (N.D. Cal. 2019) ("Although incorporation by reference may fairly be deemed a clear and unmistakable delegation where there are soph......
  • Request a trial to view additional results

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